Commentary on Radio & Audio

May 18, 2012

The Loss Of Radio's Monopoly

Radio was in trouble. Its Golden Era was over, and television had been invented. Suddenly radio was no longer the only electronic media — and it had no pictures. It was over, and radio was struggling.

These are the words of a broadcaster who lived through the era when it looked like radio was facing almost certain death at the hands of television, the new golden media. But right about the same time, radio became ubiquitous in the automobile. Soon thereafter, rock ’n’ roll gave it new life. Radio had a monopoly on the car through the ’50s and ’60s.

In the late ’60s, the 4-track tape was introduced, and that was soon followed by the superior 8-track technology. I was there, and it was pretty cool. Soon there were cassettes, and then the ’80s brought the compact disc. Each of these mediums was said to be the death of radio — yet radio still owned the car.

As Bill Burton of the Detroit Radio Advertising Group always says, “A car is nothing more than a radio on wheels.” Half of all radio listening takes place in the car, and radio has dominated this private space. Cars and traffic reports go well together, and radio is a natural part of a wakeup routine and the debriefing on the way home after a long day.And that radio dial in the car brings all in-market listening.

A few years ago, radio lost its cool and tried to defend itself against a merger of XM and Sirius because it was afraid satellite radio might eat into revenues. Looking back, that fight seems pointless. The addition of subscription audio in the car did offer listeners who were willing to pay some new choices, and it’s worked out well for Sirius XM, but it doesn’t appear to have carved very deeply into local radio listening.

But what happens when the car radio doesn’t offer just your local stations, but a choice of a quarter of a million stations from around the world? Or potentially millions of Internet-only streams? This turf that radio has controlled as a monopoly will soon be shared. This has already happened on in my car, on my smartphone, and in my home radio listening. My wife listens to KFOG in San Francisco, her favorite station when we lived there. I listen to NRJ in Paris and other international and online stations.

Because I’ve only been living in my current town for two years, those local brands have none of my loyalty. The movement to install digital devices in cars — with the popular Pandora, or TuneIn offering stations from all over the world — means you will be competing for listeners in a way you’ve never needed to before.

What will you do then?

Radio may have been winning in the car by default. How many stations do you know that run continual branding campaigns? How many stations are out in the market doing local promotions, touching local listeners, fighting to be known locally? Not enough. Failure to promote may not be a problem when you have a monopoly, but lack of localism, local involvement, and deep promotion won’t build your brand and keep people loyal. Voicetracked talent and no community presence won’t protect your brand from erosion.

Sure, it’s cheaper, but when you know you’re about to be attacked, you have to ramp up your defenses. The new Internet-equipped cars that of today will be the used cars sold five to seven years from now. That mean, in roughly seven years, virtually every car in America will have these new audio capabilities — sooner if the economy improves. Radio may think it’s smart to invest almost nothing in programming to maximize its return. But those days will end unless the brands are strong, connected, and committed to local communities.

Ten years ago I suggested radio stations need to up the talent instead of becoming jukeboxes that just segue records. I said something online would eventually do it better and crush that. Can you say Pandora?

Consider this fair warning. The dashboard is about to change. This is so important, so serious, that we’re devoting a tremendous amount of time to it at our upcoming Convergence conference, being held in Silicon Valley in June. If you know a storm is coming and you don’t get prepared, you can’t complain when the house goes down.

Radio can prepare and ensure a stronger future, or wait till the environment has already changed and new brand loyalties have been established. By then, it will be too late to make the change.

Eric, this article is a great piece of advise that, I hope, this industry will take seriously.
Localism -for the benefit of advertisers and radio operators alike- particularly now, when the US population is so fragmented, and Minorities are not Minorities any more in many parts of this Country, LOCALISM, I repeat, is essencial.

"But after an investigation of HD Radio units, the stations playing HD, and the company that owns the technology; and some interviews with the wonks in DC, it looks like HD Radio is a high-level corporate scam, a huge carny-shill. Between the high prices, poor listening options, homogenized content, and a decade and a half of FCC dealings that went into this monopoly, critics are calling the move to digital radio a 'catastrophe' and a 'complete giveaway' to behemoths such as CBS. All the major radio players, such as Clear Channel Communications, are iBiquity investors. Which means Clear Channel is paying itself for the right to broadcast, and every mom-and-pop station that wants to go digital also has pay the big boys. Nice setup!"

I know! Let's expand our spot breaks to seven and even eight minutes, twice every hour. And let's not even try to keep conflicting clients from airing next to each other, like Autozone and Car-X. See, there's something for both listeners and clients! Everybody wins!